Employers utilizing staffing agencies should be on high alert given the Department of Labor’s (“DOL”) recent investigations targeting these arrangements. Specifically, the DOL has been actively investigating businesses that contract with certain types of staffing agencies that rely on placing 1099 independent contractors for labor. Due to unprecedentedly tight labor markets, employers increasingly rely on staffing agencies to provide them with supplemental workers necessary to run their businesses. The businesses contracting for staffed labor often assume that the staffing agency is following the law and will take responsibility for any liability related to the workers they place. Unfortunately, all too often, this is not the case. In many situations, staffing agencies treat the workers they place as independent contractors, which can result in a misclassification finding when those workers are assigned a routine schedule at a facility or in another office setting and subject to supervision.
The most troubling development regarding the staffing agency and staffed business dynamic is that the DOL has recently been targeting the staffed entity for liability associated with non-payment of overtime due to the staffing agency’s misclassification of the workers as independent contractors. In other words, the DOL is attempting to hold the staffed businesses accountable for the staffing agency’s alleged misclassification. For example, the DOL recently sued a healthcare management...
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